Pandora Signs Ford, State Farm for Ads Aimed at Car Users

By Andy Fixmer -
Jan 6, 2014

Pandora Media Inc. (P), the online radio
service, began selling ads that only listeners in autos will
hear, creating a potential new revenue source. The shares rose
the most in 10 months on December listener data.

BP Plc (BP/), Taco Bell, Ford Motor Co. (F) and State Farm insurance
signed on as the first advertisers for the 15- and 30-second
spots, Oakland, California-based Pandora said in an e-mailed
statement.

By offering a targeted service, Pandora is seeking to claim
more of the $15 billion it says is spent annually on local radio
by U.S. advertisers. The service, built into 130 vehicle models
and 270 aftermarket devices since 2010, has been activated by 4
million users in cars, the company said.

“Nearly half of all radio listening takes place in the
car,” Simon Fleming-Wood, Pandora’s chief marketing officer,
said in the statement. “We knew early on that to redefine
radio, we would need to seamlessly deliver Pandora through in-dash entertainment systems.”

Pandora rose 14 percent to $31.49 at the close in New York,
the biggest one-day advance since March 8. The stock almost
tripled last year.

The company also reported audience listening hours totaled
1.58 billion across all platforms in December, an increase from
1.49 billion the previous month. Active listeners last month
climbed to 76.2 million from 72.4 million in November.

Competitor Impact

“We continue to look at these results as demonstrating
that competition is not significantly impacting Pandora’s active
listener growth or listener hours,” John Blackledge, a Cowen &
Co. analyst in New York. said in a note. He has an outperform
rating on the stock, the equivalent of a buy recommendation.

With Pandora built into cars, drivers can change stations,
choose songs and skip tracks using in-dash entertainment
systems, the company said.

As an online service, Pandora can identify listeners better
than conventional radio. Targeting drivers attracted Ford, State
Farm and Taco Bell, all of which seek to appeal to people behind
the wheel. Taco Bell is owned by Yum Brands Inc.

“This next partnership phase lets us effectively reach
highly engaged customers where they are most likely to enjoy
radio and is incredibly exciting for our business,” Erica
Bigley, Ford’s digital marketing manager, said in the statement.

Pandora said there will be fewer ads in cars than listeners
hear elsewhere on the service. Pandora One subscribers won’t
hear any ads.